The Impact of the Housing Crisis on Ireland’s Business Landscape

Ireland’s housing crisis has evolved from a social policy concern into an existential threat to Ireland’s competitiveness. One in four small and medium-sized enterprises surveyed by Chartered Accountants Ireland reported losing employees or seeing prospective employees unable to accept roles due to the unavailability of affordable housing [1]. This represents a direct brake on economic expansion at a time when Ireland faces mounting external pressures.

The statistics paint a sobering picture. Property prices have risen by 91 per cent from 2015 to the end of 2024, whilst open market rents have increased by 78 per cent over the same period [2]. This compares with overall inflation of just 22 per cent. The median home price now stands at €370,000, having climbed for 21 consecutive months, with Dublin recording average rents of €2,102 per month [3]. These figures place Ireland amongst the most expensive housing markets in Europe, with affordability at historic lows.

Economic consequences

The talent drain has already begun. Michael McAteer, managing partner of Grant Thornton Ireland, revealed that between 25 and 30 per cent of international recruits who accepted positions with his firm subsequently cancelled after researching Ireland’s housing market [4]. “If we can’t grow our labour market because we can’t get people to physically come and live here, that is going to restrain our economic growth,” he warned, “especially when we are at virtually zero unemployment and our main industries are not capital-intensive.” [5]

This pattern extends across the economy. Enterprise Ireland CEO Leo Clancy described housing as “a big pinch point,” noting that “we’re a full employment economy as things stand today, more or less. That means that we need to still bring a lot of talent to Ireland, and that’s where housing bites specifically” [6]. A survey by Vantage found that 43 per cent of respondents within the tech industry would consider relocating to another country if housing costs remain high, whilst 51 per cent of IT professionals indicated that housing costs significantly impact their decision to remain with their current employer. [7]

The crisis has prompted extraordinary responses from employers. Ryanair purchased 40 houses near Dublin Airport to rent to new cabin crew, whilst Musgrave maintains approximately 50 staff rental properties and care-home group Windmill Healthcare has 28, with plans to expand further [8]. Supermacs has reportedly spent between €6 million and €7 million on staff housing [9]. These private sector interventions underscore the sobering reality that companies are now competing not just for talent but for the basic infrastructure required to house that talent.

A crisis of supply, not just demand

The root cause is straightforward: chronic underinvestment in construction following the 2008 financial crisis. The Economic and Social Research Institute (ESRI) has made clear that no major uptick in housing supply is expected in 2025 or 2026 [10]. The ESRI estimates 33,000 new homes will be delivered in 2025 and 37,000 in 2026 — far short of the 52,000 units the Central Bank says are needed annually to meet demand [11]. Housing construction activity has fallen significantly since the property and banking crisis, creating a deficit of approximately 250,000 homes. [12]

The supply constraints are multifaceted. Construction wages are rising at 10 per cent year-on-year, pointing to potential overheating in the sector [13]. The average hourly earnings in construction jumped 10 per cent in the second quarter of 2025, far exceeding wage growth in the broader economy. This wage inflation persists despite an increase in construction employment from 177,800 in the first quarter to 190,300 in the second quarter of 2025 [14]. The Construction Industry Federation notes that statutory wage increases for site workers in 2025 were 3.4 per cent, suggesting that competition for skilled labour is driving premiums well beyond regulated rates.

Capacity constraints now create impossible trade-offs. The sector must simultaneously build houses, retrofit existing properties, and deliver infrastructure projects under the National Development Plan, all competing for the same limited pool of workers. The Department of Finance estimates that the number of workers in residential construction would need to grow by 50,000 to meet housing targets [15]. This represents a formidable scaling challenge for an industry already operating at full stretch.

The planning problem

Planning permission grants are falling precisely when they should be rising. Apartment completions dropped by 24 per cent from 2023 to 2024, according to the Central Statistics Office [16]. Cróna Clohisey, Director of Members and Advocacy at Chartered Accountants Ireland, observed that “viability of certain construction projects, namely apartments, student accommodation, and independent living facilities has been cast into sharp focus in recent months, with knock-on impacts on the costs of rent, availability of student accommodation and the lack of options for downsizers.” [17]

The regulatory burden compounds the problem. Fifty-seven per cent of small and medium-sized enterprises cited regulatory compliance as the area where they most need government help, rising to 75 per cent amongst small practices [18]. Ireland’s apartment standards are amongst the highest in Europe — the minimum size for a balcony on a three-bedroom apartment is nine square metres, equivalent to the minimum size for an entire apartment in Paris [19]. Whilst maintaining quality and safety is essential, such standards effectively price first-time buyers and other segments out of the market.

Fergal O’Brien, Executive Director of Lobbying & Influence at Ibec, described the housing shortage as “the single largest impediment to attracting and retaining talented workers, without whom business investment and expansions are not possible” [20]. Over 70 per cent of companies in an Ibec CEO survey identified housing availability for staff as a challenge to their business operations in 2023, with 30 per cent identifying it as a major challenge. [21]

The long road ahead

The Department of Finance projects that Ireland’s housing crisis will persist for at least another 15 years [22]. Housing demand is not expected to peak until the early 2030s, with “pent-up demand” not fully eliminated until at least 2040. Even under optimistic scenarios assuming housing supply reaches 60,000 units by 2030 and remains at that level, the backlog will take years to clear. This assumes the construction workforce can be expanded substantially, a significant presumption given current capacity constraints.

The cost implications are substantial. The Department of Finance projects that overall housing costs for the exchequer will rise to 2.3 per cent of national income at their peak before falling once demand normalises by 2040 [23]. This assumes 25 per cent of newly built dwellings after 2030 will be social homes, with 26 per cent of tenants in the rental market eligible for social housing supports.

The human cost is equally stark. Homelessness hit a record 14,500 people at the start of 2025 [24]. A RE/MAX Europe survey found that one-third of Irish people are considering emigration due to high housing costs, second only to Malta across the European Union [25]. Around 20 per cent of people reported “struggling or really struggling” to cover housing costs, with another 35 per cent barely coping.

Beyond fiscal tools

Some have suggested using fiscal policy to slow the Irish economy and thereby reduce pressure on the property market. This represents what economist Austin Hughes terms “a quintessentially Irish solution to what is not uniquely an Irish problem” [26]. He points out that across the OECD, house prices have risen by a cumulative 80 per cent over the past decade, with Ireland’s 78 per cent increase broadly in line with the average. [27]

Hughes argues persuasively that slowing the economy through fiscal tightening would be both ineffective and potentially regressive. “Even in economies where growth in activity and population is slow or negligible, property prices are rising quickly,” he notes [28]. The burden of fiscal adjustment would fall disproportionately on those most reliant on public services and most affected by tax changes, risking social fracture whilst failing to address the fundamental supply constraint.

The alternative is clear but challenging. Ireland could aggressively tackle planning obstacles, increase property taxes if necessary, and focus relentlessly on removing barriers to construction. As Hughes observes, “money is not the scarce resource in relation to Ireland’s housing and broader infrastructure problems. The focus in discussions of policymaking must shift from how much we spend to how effective that spending is and what obstacles need to be removed to make it more effective.” [29]

An international perspective

The European Union has recognised housing as a continental challenge, appointing Dan Jørgensen as the first-ever Commissioner for Housing [30]. Housing Europe’s State of Housing in Europe 2025 report revealed that construction is forecast to hit a 10-year low in 2025, even as demand reaches record highs [31]. Sorcha Edwards, leader of Housing Europe, reminded policymakers that “the EU too often sees housing in black and white, market versus public, when in reality there are many shades of grey.” [32]

Irish MEP Ciarán Mullooly, vice-chair of the Parliament’s special committee on the Housing Crisis, has championed the ‘Right to Stay’ principle, the idea that people should be able to live and build within their own communities [33]. “Europe gets that,” he said, “and it’s time Ireland did too.” [34]

Priorities

Ireland faces a fundamental choice. It can continue with incremental adjustments and risk seeing its competitive advantages eroded as talent relocates to more affordable markets. Or it can treat housing as the critical national infrastructure it has become, implementing the emergency measures required to close a quarter-million-unit deficit whilst meeting ongoing demand.

The construction industry federation, planning authorities, local government, and national policymakers must align behind a single, coherent vision. As Fiona Cormican, managing director of FionCor Consulting, argues, “we need one clear vision and joined-up thinking that looks at the delivery of homes as a system” [35]. This requires moving beyond risk aversion and bureaucracy towards pragmatic solutions that prioritise delivery at scale.

Michael Polzler, CEO of RE/MAX Europe, lays the stakes out simply: “You can’t grow an economy without housing” [36]. Ireland’s experience proves that economic success alone cannot solve a housing crisis born of chronic underinvestment and planning paralysis. Without bold action, the country risks seeing its hard-won economic gains undermined by the simple inability of workers to afford a place to live.